UK Constituent Parts (EU)

Mark Lazarowicz Excerpts

Wednesday 21st November 2012 Westminster Hall

[Ann McKechin]

My hon. Friend raises a good point. It is understandable, given the financial and economic crisis that the EU has suffered over the past five years, that it would take a precautionary approach on any banking issue and financial regulation particularly. The Scottish Government’s proposals are untested. They have never been used by another EU member in the way proposed, and we have no idea how they would work, because we have received no details in response to the many questions that the Scottish Government have been asked. Apparently, we must wait until autumn 2013 for the revelation, apparently in tomes. The questions should be asked now if we want a proper analysis and expert opinion not only in our own country, but throughout the EU. We need that information now.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

As far as I know, Croatia does not have a particularly large international banking presence—I hope that I am not being unjust—but Scotland is still the headquarters not just of some UK banks, but of international banks. Does that not emphasise that in any new treaty, if Scotland were to become independent, the EU would be keen to ensure that proper regulatory arrangements were in place for the Scottish banking sector?

[Ann McKechin]

My hon. Friend has spent much of his time campaigning on financial services, because they are relevant in his constituency. He hits the nail on the head, because we have a significant financial services sector in Scotland. It is the second largest outside the City of London, and has many jobs, not just in banking, but in other financial services, such as equity markets and insurance funds. Many of the people who use those funds and many investors live not in Scotland, but in other parts of the United Kingdom.

There are many questions to be asked about the currency that will be used, and the regulations. We can take it as certain that the EU will take a precautionary approach, and will ask for those issues to be tested and examined in great detail. As yet, the Scottish Government have not produced a comprehensive document setting out the proposals. At the moment, they seem to think that the rest of the UK will continue to act as the financial regulator, but there is no guarantee that it would be tempted to do so. Why would it take on the risks and responsibility for institutions outwith its borders and over which this Parliament would have no direct control or responsibility? The UK Parliament’s risk would increase.

Given the gridlock of other membership requests, and that other EU states are much less relaxed about national referendums for secession, there is every risk that the application and negotiations could drag on with consequent risks and uncertainty to our economy and particularly our financial services. I would be interested to hear today the Foreign Office’s perspective on such a scenario. Will the Minister confirm what the legal standing of a separate Scotland would be with the World Trade Organisation if at the point of secession it was not a member of the EU? Have the Scottish Government ever asked his Department for information about that? Has there been any formal dialogue with the EU Commission on the proposal for another EU member’s central bank to be Scotland’s bank of last resort?

We have discovered in the last few weeks that the truth can be difficult to admit, but surely anyone who believes that a country’s citizens should be able to make the right choices also believes that they should be provided with full answers to those tricky questions, because they will not go away.

--- Later in debate ---

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Glasgow North (Ann McKechin) on securing this important debate today. It is not surprising that those who have different views on the relationship between Scotland and the UK should also try to find different arguments to support their position about Scotland’s relationship within the European Union. There are arguments on both sides that draw on various legal authorities. The arguments put forward by people such as my hon. Friend the Member for Glasgow North East (Mr Bain) are much stronger than those that have been put forward by the SNP. None the less, I accept that arguments can be found from various sources to support different positions in the debate. Of course this is not just a legal and constitutional argument. Ultimately, whatever the legal position is, it is also a political issue that the European Union will have to face if Scotland were to become independent. Whatever side of the argument one takes, it is inevitably the case that if Scotland were to be independent, whether or not one regards it as one of the successor states to the UK or as a new state, there would have to be a new treaty. That is undoubtedly the case whatever one’s legal analysis of the position.

The new treaty would require a negotiating process, and we have heard today a number of the issues that would have to be clarified and resolved in that process. There are the institutional relationships and structures of the EU, internal matters such as the rota for which country takes over the presidency, and the number of MEPs and the number of votes. Even those matters have in the past been the subject of many years of negotiation in relation to new treaties.

There are also much weightier issues, such as the UK rebate and whether Scotland would succeed to some share of that, which would require substantial negotiation. There is also the common fisheries policy. Given the SNP’s position on fisheries issues over recent years, one assumes that it would want to see the repatriation of the common fisheries policy towards an independent Scotland. One cannot imagine that that is something that can be simply agreed within negotiations in a matter of weeks or months. It will clearly require considerable and lengthy negotiations as part of a new treaty. The same could be said of many other issues that have been referred to in this debate.

Such issues may eventually be resolved. However, in trying to resolve them, there are two factors that will have to be taken into account. As a strong supporter of UK and Scottish membership of the EU, I can say that the EU does not do things quickly. We all know that it does not resolve outstanding issues quickly, because it is a complex organisation with many member states.

[Mr Weir]

Following the precedent of Greenland, will the hon. Gentleman not accept that even if he is correct and there will have to be negotiations, those negotiations will be done not outwith the EU but within, as happened with Greenland when it wanted to leave the EU. Scotland will still be a constituent part of the EU after independence until negotiations are complete.

[Mark Lazarowicz]

That is an arguable position. I will not go into that debate now. My point is that there will have to be lengthy negotiations whatever happens. Moreover, wherever those negotiations take place in an organisational sense, they will be the subject of horse-trading and of give and take. Let us take, for example, the fisheries policy. If the SNP wanted to achieve its objective in relation to the fisheries policy, another country somewhere in the EU would demand something else. If the SNP were to get the opt out of Schengen, which it seems to want, someone else in the EU would want to achieve something else. Even with goodwill on all sides, which may be a matter of some question given that other member states might not wish to encourage easy secession, to put it mildly, from another member state, this is a process that will be lengthy and complex. That is why it is right to point that out and right to ask the question, “At the end of the day, would the benefit from leaving the UK be worth the substantial negotiations and the period of time that would be spent in undertaking those negotiations?” More importantly, it also means that it is only reasonable to ask another question: “What would be the outcome of this process?”

For the SNP to suggest that even asking those questions is in some sense disloyal to Scotland does a disservice to the people of Scotland, who are asking those questions themselves. They want to know at the end of the process what will be the relationship of Scotland with the EU? To know what that relationship would be, we need to ask the questions and we need to try to get some answers from the Scottish Government and the SNP. We then need to find out from debates and discussions with other European states what the likely response would be to the demands coming from the Scottish Government and the SNP if independence were to be supported in a referendum.

Once we have that information, the Scottish people can decide in the run-up to the referendum whether they should support independence or oppose it because of what I believe is the situation—the fact that we would be worse off in a smaller member state, even if that smaller state were able at the end of the day to enter into and complete negotiations, than if we were part of a larger member state, with all the negotiating strength that we have at the moment and that I would not want to see us lose.